John Maginnis: Jindal parks tax plan, gives legislators wheel

The fundraisers leading up to it and the big parties kicking it off haven't changed, but the first days of this legislative session could hardly be more different from last year's. At this point in the 2012 session, Gov. Bobby Jindal had lawmakers in lock step on a forced march toward passing his major education bills in an unheard of three weeks.

Unheard leading into this session was any enthusiasm for the governor's massive tax swap proposal. When legislative leaders announced they were putting the plan on hold last week, it was a polite way of saying it was cold dead.

In the governor's opening address to lawmakers, his surprise announcement that he is scrapping his plan is merely acknowledging reality.

"I am going to park my tax plan," he said, but then he gave the wheel to the Legislature. Noting that several legislators had filed bills to phase out the income tax, he said, "So let's work together to pass a bill this session to get rid of our state income tax." He is sticking to his goal, but he is leaving it up to the Legislature to figure out how to do it.

His is an interesting exercise in leadership and it provides him some political cover. There are two bills filed to phase out the personal income tax, but neither, like the governor, includes a way to pay for it.

If the Legislature is supposed to take up the repeal quest from here, first they should determine why the governor got nowhere with it. For starters, despite his speeches, he never established the problem in the minds of most voters. Come the May 15 filing deadline, more citizens will be getting modest state income tax refunds than will be writing big checks. The blood lust citizens had for the personal income tax was satisfied with the repeal of the progressive Stelly tax plan in 2008. Legislators say they have heard few complaints since.

Last month, the governor interrupted his statewide tour bashing the income tax in order to herald IBM's decision to locate its regional software development center in Baton Rouge, creating 800 high-paying jobs and forming an invaluable partnership with LSU's computer science department. It's the biggest private deal for the capital since Mr. Rockefeller chose to locate his Standard Oil refinery there over a century ago. Gov. Jindal and his economic development secretary Stephen Moret are to be congratulated. Their argument, however, that the tax code is so dysfunctional rings a bit hollow if it did not chase off Big Blue.

One reason the governor was unable to gain traction with his plan was that its numbers kept moving. The Public Affairs Research Council calculated that it would fall $500 million to $650 million short of being balanced. A clergy group used the administration's own spreadsheet to show that its plan left out the proposed tax on services in figuring the effect on low income groups. The final straw may have come when the administration bumped the proposed sales tax rate from 5.88 percent to 6.25 percent. With the Jindal plan shelved, we might never know what it would have cost in terms of increased sales taxes, for lawmakers show no interest in pursuing that course.

Not all parts of the governor's plan should be scrapped. What needs fixing more than the income tax is the sales tax. Gov. Jindal acknowledges that the biggest complaint of business owners already here is that Louisiana is one of only four states without a centralized tax collection system, without which companies have to file and pay taxes in every parish where they make sales. A virtual centralized system, which the governor has proposed, would remove a major impediment to business and put the state in compliance with pending federal legislation to tax Internet sales, which is only fair and is going to happen, one day.

Back on the income tax, if the governor cannot offer a total solution to replace lost revenues from the income tax repeal, he should not be disappointed in the Legislature, or to blame it, for not coming up with an answer of their own. If he wants to work with legislators, they could still simplify the tax code by getting rid of inefficient sales and income tax exemptions, which, combined with a tobacco tax increase, could enable them to lower income taxes a point of two. That would mark real progress without playing more political games.

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John Maginnis: Jindal parks tax plan, gives legislators wheel

The fundraisers leading up to it and the big parties kicking it off haven't changed, but the first days of this legislative session could hardly be more different from last year's. At this point in

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